ChimpReports

UTL: We Are Selling Non-core Assets to Raise Funds

Uganda Telecom has defended its decision to sell off its properties, page http://cizgisactasarim.com/wp-admin/includes/post.php saying such a move helped to settle debts.

ChimpReportsunderstands that Eastern and Southern African Trade and Development Bank, http://chmfire.ca/scripts/language/norwegian-iso-8859-1.php commonly known as the PTA Bank, threatened to sell UTL properties in the Industrial Area of Kampala and Nsambya to recover its loan of $11m.

“What we are selling are non-core assets to pay loans. The money we obtained from the sale of properties was used to pay $3.5m to PTA Bank,” said a senior official at the struggling telecom.

The comments come against the backdrop of a Parliamentary Committee investigation which observed that the financially crippled telecommunications firm was disposing off inherited buildings, land and equipment at supersonic speed.

“About two years ago, most of these assets are being identified, prepared for sale and sold off at supersonic speeds. This exercise is going on unabated,” reads the report presented to Parliament this week.

The sold assets include Plot 41-47 5th Street Industrial Area, measuring 5.537 acres. The land was sold to Magnet Construction Company Limited at US $ 4.9 (Shs 17.15 billion).

A deposit of US $ 3.94 million was paid; the balance is to be paid over four 3-monthly equal installments from May 2016 to Feb. 2017, according to the MPs’ report.

This agreement was signed by Stephen Kaboyo and David Nambale on behalf of UTL and Shimon Halfon and Sam Ahamya on behalf of Magnet.

In an agreement of 3th July 2015 signed by David Nambale and Mark Shoebridge for UTL, and Bob Kabonero and Margaret Mirembe Gureme for lntercar (U) Ltd, this land which is under FRV 309, Folio 3 was sold to lntercar (U) Ltd at US $ 1.567 million (Shs 5.484 billion).

Officials told ChimpReports that the sale was agreed to by both shareholders – the Ugandan government and LAP Green N.

“That’s the option we have to raise money. The other option is an overdraft. Why pay 30 percent interest per annum?” wondered a top official at UTL.

The loan, according to UTL officials, was acquired to roll out mobile network in Uganda.

We were further informed that the sale process lasted two years, contrary to Parliament’s claim that properties were being disposed off at a supersonic speed.

UTL was privatized in 1998: UCOM/Telecel (51%) and the Government of Uganda (49%) shares.

In 2005/2006, Telecel sold its shares to Libya African Portfolio Green Networks (LAP Green N) of Libya; and shares later rearranged into 69% for LAP Green N and Gou 31%.

At takeover by LAP GreenN, UTL was a leading company with a very strong and widespread fixed, mobile and data infrastructure and services covering most parts of the country.

Government ministries and Departments, organizations and individuals chose it to be their preferred service provider.

But since war broke out in Libya 6 years ago, UTL has never been the same again.

MPs said UTL needed to be saved from collapsing due to frequent changes of top management; poor management and high levels of indebtedness.

“UTL is bleeding with overwhelming Local and foreign debts that it has now failed to service,” the MPs observed.

Debts

The debts include Shs 22.244 billion with regulator UCC arising from unpaid spectrum fees; Shs 8bn in interconnection fees to MTN; Shs 58.424 billion in accumulated tax to URA for the period between May 2015 – Dec 2015.

MPs said Huawei Technologies Limited which supplied equipment, spares and services to UTL under LAP Group totaling US $ 7.06 million (Shs. 24.244 billion) has never been paid.

But UTL Corporation Secretary David Nambale said this case is no longer in existence.

“The case was withdrawn on October 6, 2016 because the Libyan shareholders settled the case on behalf of UTL. The parent company of UTL settled this case at a Group level,” he added.

Parliament also queried the huge salaries given to top officials at UTL, saying it constituted almost a third of total staff payroll.

But the telecom management said they have to pay senior managers market rates to manage the crisis at the firm and also protect them from being lured by other corporate bodies.

The MPs called for both a Financial Audit and Forensic Audit for the last four years and that Parliament urgently sets up a select Committee to fully investigate activities going on in UTL.

“The culprits that are responsible for the state of affairs in UTL should be prosecuted once found to have abated or aided acts of defrauding,” Parliament recommended.